Bitcoin mining is usually associated with high electricity costs and expensive hardware. Mining bitcoins at home involves substantial investments. In many cases, you need to think about equipping a special room for the computer, which is doing the mining. However, the key to mining the cryptocurrency is not the hardware, it’s data capacity.
What is the way to get the capacity without hardware? The answer is obvious. It’s using clouds. A cloud can help you earn as many tokens as your own server without as many expenses. However, while the advantages are numerous, cloud mining comes with a few disadvantages as well.
Advantages of Cloud Mining:
- Cutting electricity costs
- Not equipping special rooms/space to house the computer
- No extra mining equipment to get rid of later
- No need to research and order mining equipment
Disadvantages of Cloud Mining:
- Possibility of fraud
- Lower profits (you need to pay for the space you use)
- Some cloud operators warn about ceasing the operations depending on the bitcoin’s value.
- Releasing part of the control
If you make a decision to use cloud technologies for mining bitcoins, you can take advantage of three approaches.
- Hosted mining – You lease a machine with a hosting service from a provider.
- Virtual hosted mining – You create a virtual server and use it to house your own mining programs
- Leasing hashing power – You lease a certain amount of hashing power without relying on physical and/or virtual server.
How Much Can You Earn By Using Cloud Technologies in Mining?
You can use a profitability calculator to find out how profitable the cloud mining really is. Considering all the money you save on hardware and electricity and the money you spend on using the services, you can come up with an approximation. Online calculators usually work with physical mining parameters rather than cloud options. However, you can still approximately figure out how much you’ll be spending. When entering the data, you can replace the monthly electricity bill with monthly mining bill.
Replacing electricity consumption with monthly mining bill is not hard. The provider gives you a monthly running price tag. You need to convert it into the cost per kw hour. In order to do that, you need to divide the monthly mining cost by 0.744 (conversion factor).
If you are thinking about ICO, the calculations may be more complicated. In any case, cloud technologies for mining can change your approach. ICO marketing efforts are usually justified by attracting cloud miners.
The Risks of Cloud Mining
Any type of cryptocurrency mining comes with a certain set of risks. It’s possible to make a good profit in case you take the right steps. When you just start mining bitcoins using cloud technologies, you’ll most likely begin making money in just a few months. However, when the difficulty level of the bitcoin goes up, you can start losing money.
You may be able to continue seeing a profit if instead of using the money you earn, you invest it in maintaining a high hashing rate. However, this is not a 100% remedy.
As we mentioned earlier, cloud mining brings about a certain risk of fraud or bad management, which leads to losses. When you are considering cloud mining, you must be ready for the risks. The all-time truth is “never invest more than you are ready to lose.” It works for cloud mining as well as for any other method.
Using cloud technologies to mine bitcoins is becoming popular. Even if you consider all the risks, it seems to be an attractive way to make money.